More Stories

Informist, Monday, Aug. 4, 2025

 

By Vidhushi RajPurohit

 

MUMBAI – Primary market activity slid on Monday as the surplus liquidity in the banking system surged above INR 4 trillion, reducing the borrowing needs, dealers said. Moreover, some issuers were also on the sidelines as expectations of a policy repo rate cut Wednesday resurfaced after the weak US jobs data, they said.

 

Surplus liquidity in the banking system, as indicated by the central bank's net absorption of funds, surged to INR 4.10 trillion Sunday, from INR 3.65 trillion Friday. The rise in the surplus liquidity was on account of the government's salary and pension payouts.

 

HDFC Bank was the sole issuer of certificates of deposit Monday, raising INR 20 billion through a one-year paper at 6.26%. The private sector lender has a paper due for maturity in August, amounting to INR 18.00 billion. Subdued activity in the primary market led the borrowing rates to remain unchanged from the previous day, dealers said. The indicative rate for the three-month CD was at 5.75-5.80% Monday. 

 

"There are again talks of a rate cut after Soumya Kanti's (State Bank of India Group Chief Economic Advisor Soumya Kanti Ghosh) report, so people may be waiting for clarity now before coming to the market," a dealer at a private sector bank said. "Rollover needs are also not that high now, so that is also keeping banks away." The total CDs due for maturity in August are at INR 193.30 billion, lower than the previous month's INR 230.95 billion. 

 

The Reserve Bank of India's Monetary Policy Committee commenced its three-day policy review meeting Monday. Traders are widely expecting the central bank to keep the policy rates unchanged after the larger-than-expected 50-basis-point cut in June. Some traders have now increased their expectations of a cut in policy rate after weak US jobs data raised the chances of rate cuts by the Federal Open Market Committee in September, dealers said. 

 

Some traders are now partly pricing in chances of a rate by the RBI's rate-setting panel on Wednesday, dealers said. Most are of the view that there will likely be a rate cut in October, with some expecting a cut in December, they said.

 

"With inflation having decisively eased and remained within the RBI's tolerance band for several months, maintaining a restrictive policy stance risks exacerbating output losses that are neither easily reversible," Ghosh said in a report.

 

Issuances of commercial papers also dropped to INR 27.50 billion Monday from INR 39.25 billion on Friday. ICICI Securities was the largest issuer of commercial papers, borrowing INR 7.50 billion through a six-month paper at 6.50%. Cholamandalam Finance raised INR 5 billion via a six-month paper at 6.51%. 

 

Activity in the secondary market rose as mutual funds were seen buying papers to deploy their excess funds, dealers said. Short-tenure papers, those maturing in three to six months tenure, remained in favour due to uncertainty on future rate-cut trajectory, they said.  Total CD turnover in the secondary market jumped to INR 109.50 billion Monday, from INR 62.15 billion Friday. For CP, the volume rose to INR 86 billion, from INR 19.56 billion Friday. 

 

--Primary market

* Godrej Consumer Products, Godrej Industries, Julius Baer Capital, ICICI Securities, Cholamandalam Finance and Axis Securities raised funds through CPs

* HDFC Bank raised funds through CDs

 

--Secondary market

* Bank of Baroda's CD maturing Tuesday was traded six times at a weighted average yield of 5.3663%

* ICICI Securities' CP maturing Tuesday was traded four times at a weighted average yield of 5.3663%

 

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1700 IST, as detailed by the Clearing Corp. of India's F-TRAC platform:

 

Certificates of deposit		Commercial paper
Monday	Friday	Monday	Friday
109.50	62.15	86.00	19.56

 

End

 

Edited by Saji George Titus

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.